The battle over who will own the CBD market in the Lone Star State is heating up.

The state of Texas has awarded three conditional licenses to cultivate, process and dispense “low-THC cannabis” to intractable epilepsy patients. The highest ranked applicants that were award the licenses were Cansortium Texas, Compassionate Cultivation and Surterra Texas, and they will now undergo onsite inspections.

The Texas Compassionate Use Act went into effect June 1, 2015, and states that companies may grow, extract and distribute CBD-based medicine. The Texas Department of Public safety stated, “The top three applicants provided sufficient information to indicate that should those three applicants receive a license as a dispensing organization, those applicants would ensure reasonable statewide access to and availability of low-THC cannabis for patients registered in the compassionate-use registry as required by the Texas Compassionate Use Act.”

According to §12.14. Application and Licensing Fees and Method of Payment the application requirements and license fees are as follows:

  1. Fee for a dispensing organization license is $7,356.
  2. License fees are $488,520 for a two-year period and $318,511 for the biennial renewal
  3. The registration fee is $530 for both the original registration and renewals.

There were 43 applicants and they were scored by eight Department of Public Safety employees across six categories, including Security (20%), Accountability (20%), Financial Responsibility (10%), Technical and Technological Ability (20%), Infrastructure (20%) and Cover Letter (10%).

The state provided a ranking of the companies based on its scoring matrix. The following companies scored in the top ten:

    1. Cansortium Texas 93.62333
    2. Compassionate Cultivation 92.49333
    3. Surterra Texas 89.67667
    4. Arete Holistics 88.83667
    5. GB Sciences 85.91667
    6. Col. Care Texas 85.605
    7. VMG 83.52333
    8. Mercury Copper Farms 80.71167
    9. Lone Star Compassion Center 80.50333
    10. Paradigm Pharm 80.055

Hemp Business Journal has covered Surterra’s activity in Florida as one of the state’s seven medical marijauna license holders. Two publicly-traded companies, GB Sciences (OTC: GBLX) and Indoor Harvest (OTC: INQD) were among the applicants. Indoor Harvest is in the process of merging with Alamao CBD (which scored 16th). As reported by New Cannabis VenturesColumbia Care, one of the largest operators of vertically integrated medical cannabis dispensaries in the country, failed to win a license, scoring 6th.

Readers should note the definition of “Low-THC cannabis” according to the Texas Compassionate Use Act and that the definition provides a route for companies in Texas to directly compete against CBD industry heavy-weight, GW Pharmaceuticals.

Sec. 169.001. DEFINITIONS. 

  • “Intractable epilepsy” means a seizure disorder in which the patient’s seizures have been treated by two or more appropriately chosen and maximally titrated antiepileptic drugs that have failed to control the seizures.
  • “Low-THC cannabis” means the plant Cannabis sativa L., and any part of that plant or any compound, manufacture, salt, derivative, mixture, preparation, resin, or oil of that plant that contains:
    • not more than 0.5 percent by weight of tetrahydrocannabinols; and
    • not less than 10 percent by weight of cannabidiol.
  • “Medical use” means the ingestion by a means of administration other than by smoking of a prescribed amount of low-THC cannabis by a person for whom low-THC cannabis is prescribed under this chapter.
  • “Smoking” means burning or igniting a substance and inhaling the smoke.

The low-THC CBD products permitted under the Compassionate Use Program are different from the hemp derived CBD products already available to Texas consumers. “Unlike marijuana-derived CBD oil, hemp-derived CBD oil contains no more than 0.3 percent THC,” said Sheila Hemphill, policy director of the Texas Hemp Industries Association.

“Industrial hemp products are safe, legal and can be purchased on-line or on the shelves of hundreds of retail locations in Texas.  Thousands of Texans have purchased and benefited from the use of industrial hemp products such as hemp hearts, protein, milk, cosmetics, and CBD oil,” said Coleman Hemphill, TXHIA Executive Director.

This confusion led DPS last fall to confiscate hemp-derived CBD products from Austin locations of Peoples Rx; the agency later decided not to pursue criminal charges.

The State of Texas is the first state to use “cannabis” as part of its legal definition for CBD products, allowing both hemp and marijauna cultivators to apply for the licenses. Will other Southern and Conservative states follow Texas?  Will this blur industries lines or create a picket fence between the hemp and marijauna industries? Hemp Business Journal will be covering this story as it unfolds.

Image Credit: RYAN POPPE